IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `H' NEW DELHI
BEFORE SHRI A.N. PAHUJA, ACCOUNTANT MEMBER
AND
SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER
I.T.A.No.3583/Del/2010
Assessment Year : 2006-07
Income Tax Officer, Vs Tara Devi,
Ward 33(4), A-65, Sector-31,
C.R. Building, Noida.
I.P. Estate, (PAN No. AEBPD5766P)
New Delhi.
(Appellant) (Respondent)
Appellant by: Dr. B.R.R. Kumar, Sr.DR
Respondent by : Shri S.B. Gupta
ORDER
PER CHANDRA MOHAN GARG, JUDICIAL MEMBER
This appeal has been preferred by the Revenue against the order of
Ld. CIT(A)-XXVI, New Delhi dated 14.5.2010 on the following ground:-
"The ld. CIT(A) has erred in deleting the addition of
Rs.10 lakh made on account of unexplained
investment in relief RBI Bond u/s 68 of the I.T.Act,
1961, relying on the additional evidence in
contravention of Rule 46-A of I.T. Rule, 1962."
2. Briefly stated, the facts of the case are that the assessee filed the return
declaring income of Rs.2,64,396 on 25.8.2006. The same was processed u/s
143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) and a
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notice u/s 143(2) of the Act was issued but neither the assessee nor his
representative attended the hearing. Subsequently, a number of notices were
issued to the assessee and finally, notice u/s 142(1) of the Act was issued on
29.9.2008, fixing the case for hearing on 7.10.2008 but nobody attended the
hearing of the assessment proceedings on behalf of the assessee. Lastly, a
show cause notice on 8.10.2008 was also issued to the assessee giving seven
days time but the same remained unattended. In these circumstances, the
AO proceeded to complete the assessment ex parte u/s 144 of the Act on the
basis of best judgement principle. The AO noted that the assessee has no
explanation to offer with regard to the investment of Rs.10 lakh invested in
RBI bonds on 31.3.2006 and he made an addition of the same amount u/s 69
of the Act to the income as declared by the assessee in the return of relevant
year.
3. Being aggrieved by the above assessment order, the assessee invoked
the ld. CIT(A)-XXVI, New Delhi and the appeal was allowed by admitting
and considering additional evidence submitted by the assessee. Ld. CIT(A)
observed that due to non-service of any of the notices, the assessee was
prevented by sufficient cause from furnishing the evidence before the AO
and the First Appellate Authority admitted the additional evidence under
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Rule 46A of the I.T. Rules, 1962. Ld. CIT(A) finally passed the impugned
order and deleted the addition made by the AO.
4. Ld. DR vehemently submitted that the ld. CIT(A) grossly erred in
deleting the addition of Rs. 10 lakh made on account of unexplained
investment in RBI bond u/s 68 of the Act, relying on additional evidence,
which was admitted by him in contravention of Rule 46A of the Rules. He
also submitted that the assessee avoided to attend the proceedings before the
AO and the assessee bypassed the authority of AO and directly submitted
the additional evidence before the ld. CIT(A). The additional evidence was
admitted by the CIT(A) after calling a report from the AO but the same was
not confronted to the AO for examination and rebuttal. Therefore, the action
of ld. CIT(A) was not justified.
5. The assessee's representative supported the impugned order and
replied that the notices were issued by the AO but these were not duly
served on the assessee. Therefore, the assessee prevented by submitting
relevant evidence before the AO and addition was made on erroneous and
baseless grounds. He also submitted that the ld. CIT(A) rightly admitted the
additional evidence and the deletion made by him was on reasonable and
justified grounds.
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6. We have considered the rival arguments of both the parties and
carefully perused the entire record before us. On bare reading of the
impugned order, we observe that the ld. CIT(A) sought the comments of the
ld. AO for the admissibility of the additional evidence and in response to
that, the AO submitted, vide the remand report dated 10.3.2010, with an
objection by the AO that the assessee did not participate in the assessment
proceedings despite several notices issued to him, therefore, additional
evidences should not be admitted. We also observe that the ld. CIT(A) also
noted that the AO has not commented on the merits of redemption proceeds
and loan of Rs. 2 lakh from Ms Dimple Gupta as sources of investment
made by the assessee. Ld. CIT(A) asked the assessee to furnish rejoinder to
the remand report and the same was submitted.
7. Ld. CIT(A) further noted that the AO has not made any adverse
remarks in respect of remand proceeds of 9% relief bonds amounting to
Rs.7.765 lakhs, thus, the source has been accepted by the AO. The Ld.
CIT(A) has also drawn a finding that the copy of the income tax return of Ms
Dimple Gupta in support of her creditworthiness was also not adversely commented by
the AO in the remand report. Therefore, the ld. CIT(A) concluded with a finding that
loan transaction from Ms Dimple Gupta was reliable as her identity and
creditworthiness, coupled with genuineness of the transaction, was established by the
assessee.
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8. In view of above, we finally observe that the ld. CIT(A) admitted the
additional evidence after considering the remand report from AO on just and
reasonable grounds as the notices issued by the AO were not duly served on
the assessee and due to this reason, the assessee was prevented from filing
relevant evidence before the AO but the ld. CIT(A) did not comply with the
mandatory procedure as per Rule 46A (3) of the Rules as the AO has not
been allowed reasonable opportunity to examine the evidence and to
produce any evidence or documents in rebuttal of the additional evidence
produced by the assessee.
9. In view of above, we finally observe that the ld. CIT(A) considered
additional evidence without allowing reasonable opportunity to the AO to
examine the evidence and to rebut the same and we also observe that he did
not follow the required procedure as per Rule 46A of the Rules. Therefore,
we find it appropriate to remit the matter back to the file of ld. CIT(A) for
fresh adjudication after following the required procedure and providing an
opportunity to be heard to the assessee. The assessee shall cooperate in the
fresh proceedings before the ld. CIT(A).
10. In the result, the appeal of the Revenue is treated as allowed for
statistical purposes.
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Order pronounced in the open court on 31st May, 2012.
Sd/- Sd/-
( A.N. PAHUJA ) (CHANDRA MOHAN GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
DT. 31st May, 2012
`GS'
Copy forwarded to:-
1. Appellant
2. Respondent
3. CIT(A)
4. CIT 5. DR
By Order
Deputy Registrar